THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

PAULA ZAHN, CNN ANCHOR: And welcome to all of you. We appreciate your joining us tonight. Just ahead, an emotional insider's look at how American forces are trained to kill and face the ultimate reality of war. And our own CNN "Security Watch." Why will the most densely populated states face drastic cuts in homeland security money?

But first tonight, defending the indefensible. Saddam Hussein brutalized Iraq for 24 years. Occupation forces are still finding mass graves. He is supposed to get a fair trial, but can anyone be impartial and do you really care?

In a minute, we're going to meet an attorney who's actually defending one of the most notorious dictators in history.

(BEGIN VIDEOTAPE)

ZAHN (voice-over): The short list of crimes attributed to the Hussein regime includes ethnic cleansing, gassing Kurdish villagers, a brutal campaign against the rebellious marsh Arabs, inciting a war with Iran, and invading Kuwait.

Last July, Saddam and other regime leaders were arraigned on charges of war crimes and crimes against humanity. And it's just been announced the first court proceedings against Saddam's underlings will be next week, beginning with a pretrial investigative hearing for the infamous "Chemical Ali," General Hassan al-Majid. The nickname comes from his alleged use of poison gas to kill thousands of Kurds in the 1980s.

He's also accused of atrocities against Iraq Shiite Muslims and during the occupation of Kuwait. The proceedings will be confidential, but the accused will have rights similar to defendants in U.S. courts, such as the right to counsel and the right to remain silent. But plenty of questions remain. Will the insurgency, Iraqi politics, or judicial inexperience prevent fair trials?

Will Saddam Hussein be called as a witness? And when will he get his own day in court?

(END VIDEOTAPE)

ZAHN: Saddam Hussein's family has picked a team of 23 defense attorneys. Curtis Doebbler is the only American. He joins me tonight.

Thank you so much for joining us tonight.

CURTIS DOEBBLER, ATTORNEY FOR SADDAM HUSSEIN: Thank you.

ZAHN: Sir, is there any doubt in your mind that Saddam Hussein is guilty of invading Kuwait?

DOEBBLER: Well, I think where we have to start in this situation is that the only reason that he might...

ZAHN: But that's not the question I asked, sir. Is he guilty of invading Kuwait or not?

(CROSSTALK)

DOEBBLER: The only reason he might be put on trial is because the United States is responsible for a very serious violation of international law in invading a sovereign country, Iraq.

ZAHN: All right, let me try one more time, sir. We just listed a laundry list of things Saddam Hussein is accused of. Do you think he's guilty of being behind the invasion of Kuwait or not? It's a simple question.

DOEBBLER: Paula, that's not for me to decide.

What I can tell you is that no country in the last four years has violated as many rights of as many people as seriously as the United States government. And I think that is very unfortunate.

ZAHN: We're not talking about the United States government right now. We're talking about the man you'll be defending.

Let's talk about another charge. And we're going to look at video showing what people can see with their own eyes here, people being gassed and tortured under Saddam Hussein's regime. Is he guilty of this or not?

DOEBBLER: Paula, as you know, lawyers do not decide the guilt of a defendant. A court should decide the guilt of a defendant.

And that court should be set up properly to be independent and impartial and to apply due process. That is what American law...

ZAHN: But you're going to have to defend him against that charge. How will you defend him against that charge of torturing his own people?

DOEBBLER: That is what American law says. That is what international law says. And right now, we do not have a situation where we have a legitimate government, where we have an independent and impartial tribunal, where we even have judges that are trained to be able to carry out such a case.

(CROSSTALK)

ZAHN: That is not the way the Iraqi people perceive it. The latest Gallup poll shows that the majority of Iraqis believe that Saddam Hussein will get a fair trial, and 80 percent of them in the same poll believe that he is guilty of a whole host of war crimes.

DOEBBLER: Well, Paula, I'm sure you're aware how polls might be skewed and how they might sometimes be legitimate.

I'm sure you're aware that, just before the Gulf War, most people in the world believed that President Bush was a greater threat to peace and security than Saddam Hussein. Now, if you want to believe that poll, then perhaps we have the wrong person in the dock right now.

ZAHN: Well, let's come back to what your job is here. You've got to admit you have a pretty steep hill to climb. Do you acknowledge that?

DOEBBLER: I think every criminal defense is a challenge for the lawyers and for the prosecution.

ZAHN: So what do you see as your biggest challenge trying to defend Saddam Hussein?

DOEBBLER: Well, I think our biggest challenge is trying to ensure that the rule of law is respected in this instance. And, right now, I think the biggest problem with the rule of law is being caused by the United States, who not only started this situation through illegal action, but is now perpetuating that by ensuring that there will not be a fair trial, that there will not be an independent tribunal, that there will not be impartial indulges, that the defendant will not be allowed his basic due process rights, which are enshrined in the American Constitution, enshrined in international human rights law, enshrined in international humanitarian law.

ZAHN: Mr. Doebbler, you've got to understand, a lot of people watching you tonight are scratching their head and they have seen video that they think proves seven or eight of these very specific crimes he's accused of. Why do you feel so strongly about defending him? Why this case?

(CROSSTALK)

DOEBBLER: I feel strongly about defending the rule of law. As I'm sure you're familiar with my public statements and what has been written about the work I do, I defend many people. He represents less than 1 percent of the individuals I represent. But, unfortunately, the media is not interested in the refugees and internally displaced people and many of the others who I represent.

But each one of these people have the same basic due process rights. That's what our system here in America is based on. We're not talking about values from outside the United States. We're talking about basic values that are shared by the American public that, in fact, the United States is based on, the values of the rule of law. And right now -- it hurts me to say that, but right now, the United States government is the main violator of those basic principles. And that's a shame. ZAHN: Do you understand why so many Americans are angry at you for taking on this case?

DOEBBLER: I'm not sure so many Americans are angry at me. In fact, I've got quite a lot of support from colleagues, who understand that defense lawyers have to sometimes defend individuals who we might not like.

ZAHN: Curtis Doebbler, we're going to have to leave it there tonight. Thanks so much for joining us. Appreciate your time.

DOEBBLER: Thank you very much, Paula.

ZAHN: There is a lot more ahead here tonight.

(BEGIN VIDEOTAPE)

ZAHN (voice-over): Tonight, training young Americans to face the hard, cold truth of war, kill or be killed.

ANTHONY RIDDLE, U.S. MARINES: I had to walk away. I mean, I can't handle this anymore.

ZAHN: And our CNN "Security Watch." It's the most densely populated state, home to vital shipping ports and a major international airport. So why is New Jersey scrambling to find money to protect itself from a possible terror attack?

UNIDENTIFIED MALE: How in God's name can the president justify this? It is unconscionable.

ZAHN: And our question of the day. Can Saddam Hussein and his top aides get fair trials in Iraq? Go to CNN.com/Paula and let us know what you think.

The results and much more ahead tonight on PAULA ZAHN NOW.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

ZAHN: In Iraq today, insurgents set off a bomb near one of the holiest sites in Shia Islam. The blast outside the Imam Hussein Mosque in the southern city of Karbala killed at least seven people. Nearly three dozen were wounded.

In other violence, American service members were killed south and west of Baghdad. Meanwhile, the Pentagon's trying to move past the embarrassing revelation that 40 percent of the military vehicles in Iraq are not properly armored. It's going to fix the equipment at a cost of $4 billion. Defense Secretary Donald Rumsfeld was caught off guard last week when a soldier in Kuwait asked why the vehicles weren't protected.

Since then, Rumsfeld's come under heavy fire, Senator Joe Biden calling on him to step down. And a member of the Republican Party, Senator John McCain, said he has no confidence in the secretary. Is the criticism fair?

Let's ask Retired Marine Colonel Gary Anderson, an adviser to Deputy Secretary of Defense Paul Wolfowitz, and retired Army Command Sergeant Major Steven Greer, an analyst of the office of the secretary of defense.

Welcome, both of you.

RETIRED SGT. MAJ. STEVEN GREER, U.S. ARMY: Hi. How you doing, Paula?

RETIRED COL. GARY ANDERSON, U.S. MARINE CORPS: Paula.

ZAHN: I'm fine. Thanks.

Colonel Anderson, first of all, is it defensible that 40 percent of these vehicles aren't armed properly?

ANDERSON: You know, Paula, when the secretary said that you go to war with the Army you have, I think what he was trying to say in shorthand was that we've been building the Army we have since 1971.

General Abrams, the chief of staff then, made a conscious decision to put the forward combat power of the Army that was needed to fight fast wars in Europe and Korea in the regular forces and the long-haul stuff that you would need to fight a longer war in the Reserves and the Guard.

ANDERSON: As I say, we have built -- we have gone about building that force for 30 years to do what it was very well prepared to do then, to do in Desert Storm, to do in Afghanistan and the early part of this war. Now we're in a different kind of war. We're in a nonlinear war.

Back, in those days, the support troops and the kinds of troops that aren't armored now weren't on the front lines, weren't getting the kind of -- into the types of situations they are. Now, in a guerrilla war, they are the guys that actually take the brunt of it, because -- through the targets that the guerrillas go after; 30 years of building a force to do one thing can't be turned around on a dime.

ZAHN: All right, let's ask the sergeant major about that basic acknowledgement that perhaps we're not ready for the kind of situation our troops face on the ground today, in particular when it comes to the strength of this insurgency movement. What do you think is the excuse for that?

GREER: Yes, hi, Paula. How you doing? ZAHN: I'm fine. Thanks.

GREER: Well, there's no excuse, Paula.

And go back to the up-armored Humvee issue. The logic that every soldier needs an up-armored Humvee to be successful in a low intensity conflict environment doesn't hold any water. It's an invalid argument. That logic means every soldier should have an M1-A1 tank because they can withstand much more impact of an improvised explosive device.

No, the issue here is that, when we started the up-armored Humvee program, we didn't require every soldier in the Army's inventory to have an up-armored Humvee. And even with every soldier having an up- armored Humvee regardless of what level of armament is on that vehicle, you still would not quell the Iraqi insurgency. That might increase force protection, but that does nothing with winning in the insurgent environment.

ZAHN: So, as I'm hearing both of you talk, Colonel Anderson, I assume everybody's going to come to the same conclusion I am, too, that we rushed to war. Would we have been in better shape if we had gone to war a year later?

(CROSSTALK)

ANDERSON: No, I don't think we would have, for the same reasons that I mentioned before.

It takes a long time to totally change the Army. Now, one thing in Secretary Rumsfeld's defense, he came in to office four years ago saying that we need to transform the Army because we're going to be facing different battlefields, nonlinear battlefields and so forth. I will tell you one thing. Senator McCain and Senator Hagel have been critical. And that's fine. That's their job. They're senators.

But if Secretary Rumsfeld has to make the changes, the kind of fast changes that will be required to totally turn this Army around in a short amount of time, McCain and Hagel can get in line with every senator and every congressman whose ox is being gored and who doesn't like it. And that's the other side of that argument.

ZAHN: Finally, I need a brief answer to this, Sergeant Major Greer. A lot of criticism that the defense secretary has not put enough boots on the ground. True or false?

GREER: No, I think it's completely false.

You have to take it in context of what period of the war we're talking about. During the combat operations, the initial going-in effort into Baghdad, you could make a valid argument for not having enough troops. That's a fact. We were very thin there. But you can't put 400,000 soldiers in an insurgent environment like we have today, because if you do so, all you do is increase the insurgent targets manifold. You have refuelers, resupply vehicles. You have any number of vehicles and convoys that are going to occur several times more than what you currently see. So you've increased insurgent targets. But your combat power has only been increased very smally, because 400,000 soldiers in theater means that 20,000 of those soldiers will be war fighters, guys kick in doors and kill insurgents. The other 80 percent of that is a huge logistics trail that we just can't keep up with.

(CROSSTALK)

GREER: And we also don't have 400,000 soldiers.

ZAHN: You've got that right, which, of course, is a big debate on Capitol Hill right now about how you grow the force.

Steven Greer, Gary Anderson, thank you for both of your perspectives tonight.

ANDERSON: Sure.

GREER: Hey, thanks, Paula.

ZAHN: My pleasure.

It is a soldier's job to kill or be killed. And American forces in Iraq face that choice every day. Coming up next, an insider's look at how the military trains its men and women to kill.

(COMMERCIAL BREAK)

ZAHN: A grim milestone in Iraq.

The U.S. military death toll has passed 1,300, according to the Associated Press. Kill or be killed is the ultimate reality of war. But ask any soldier who returns home. It's not always the end of the battle.

In her work for "CNN PRESENTS," Candy Crowley talked with Marines shortly after the fall of Baghdad last year. And they spoke candidly about the downside of being fit to kill.

(BEGIN VIDEOTAPE)

CANDY CROWLEY, CNN CORRESPONDENT (voice-over): General George Patton said, the object of war is not to die for your country, but to make the other bastard die for his.

RIDDLE: Before war, you're thinking, oh, I can deal with that. That's nothing. I'm a Marine. I can handle it.

CROWLEY: Now, Sergeant Anthony Riddle is starting to live with having to kill.

RIDDLE: When their eyes are open, staring right at you, half the faces are missing. CROWLEY: He had killed in battle before, but not like this. Not so close.

RIDDLE: Looking at the body just sitting there. And then we were told, hey. We've got to pull the bodies out.

And that's when it really hit me. When we pulled them out and their heads hit the ground and just total lifeless. Nothing going on with that body. And I had to walk away. I mean, I was like, I can't handle this no more.

CROWLEY: To kill in war is to run the gamut of emotions.

U.S. Marines, Sergeant Riddle's team, searching an industrial area near Baghdad. Along the road they encounter Iraqis who point their AK-47s at the Marines.

RIDDLE: One of my guys got up on his hood and took the first guy out, shot him right in the heart. And he dropped instantly.

CROWLEY: Wounded, another Iraqi writhes on the ground next to his gun. The Marines kill him -- then cheer.

RIDDLE: Like, man, you guys are dead now, you know. But it was a good feeling.

UNIDENTIFIED MALE: Fire!

UNIDENTIFIED MALE: Yeah!

CROWLEY: When the battle is over and you are still standing, the adrenalin rush is huge.

RIDDLE: I mean, afterwards you're like, hell, yeah, that was awesome. Let's do it again.

CROWLEY: Even in Iraq, there are quiet times. And the afterthoughts come.

RIDDLE: Some days I'm just sitting in my rack here, just thinking about what we did over the war. Those two bodies always stick out in my head. Or sometimes you dream about it. You just wake up in a sweat.

CROWLEY: They did not teach that part in basic.

UNIDENTIFIED MALE: Do you understand?

(SHOUTING)

CROWLEY: At Fort Benning, Georgia, killing is taught as a professional skill, a way to keep from dying. A way to get the job done.

COL. TIM DUNNIGAN, ARMY INFANTRY SCHOOL: We don't want to create monsters. We want to create young men who are willing to fight and kill, if necessary, to defend our country. But I don't want to walk around every day and tell them, you need to kill, get over here and learn how to kill, and put them through drills about killing, because it's not what is expected. Target acquisition is a good way to say it. These are targets, targets of opportunity, enemy targets. There's no need to personalize it whatsoever.

CROWLEY: But Fort Benning is not a war zone. A plastic target is not an enemy. Training is just a shadow of war.

RIDDLE: You know that you killed them, and you take their life. And I know as me having a little daughter at home and a wife at home, that guy probably had a daughter or some kid or a wife at home, waiting for him. And he's not returning that night.

CROWLEY: In a controversial study of World War II infantrymen, an Army researcher found that at most, 25 percent -- only one in four infantrymen -- actually fired at the enemy.

GROSSMAN: The problem in World War II was that we were firing at bull's eye targets most of the time. But most of the time we weren't making a realistic depiction of what we were doing. We were teaching marksmanship skills and not killing skills.

CROWLEY: After World War II, the Army began using targets shaped like human beings and eventually pop-up targets to get soldiers used to the idea of hitting the real thing.

By Vietnam, firing ratios approached 100 percent.

GROSSMAN: It made a tremendous difference, because now, conditioned stimulus is a man-shaped silhouette pops up in the field of view. Conditioned response, you have a split second to engage the targets. With stimulus feedback, you hit the target, the target drops, stimulus response, stimulus response.

And what we've done is, we've made killing an unthinking, conditioned reflex.

CROWLEY: But if killing is an unthinking reflex, the aftermath can hijack your thoughts, something these graduates don't know yet.

RIDDLE: When you talk to your other marines, you want to try to sound hard to them. Yes, I dropped that guy you know. It ain't no big deal. But really you think in your head, man, you know it is a big deal.

CROWLEY: It is a big deal. It is sometimes a life-changing deal.

RIDDLE: I don't want to take it home with me. That's something that I'm not going to share with everybody else. If you wanted to share it with me, then you should have been here with me. No one will ever know unless they've been here.

(END VIDEOTAPE)

ZAHN: And, in that report, Candy Crowley interviewed soldiers and Marines after the fall of Baghdad, as we explained earlier.

Well, since then, Sergeant Riddle has left the Marine Corps. And a major Army study on psychological casualties is due in the next several months. Earlier studies pointed to some disturbing trends. They found that nearly one in five ground troops suffered from either major depression, anxiety or post-traumatic stress disorder. The same studies also found that fewer than half of the troops who need psychological counseling actually seek it.

Homeland security comes with a price, but why are millions of Americans who live near one of the nation's biggest sea ports and airports dealing with a drastic cut in security funding? Our "Security Watch" is next.

(COMMERCIAL BREAK)

ZAHN: In tonight's "Security Watch," an admission from Tom Ridge, the outgoing secretary of homeland security. He now says the color-coded warning system needs to be fine-tuned, that it is confusing. It's also been the butt of jokes on late night television. Well, one state not where their not laughing about it is New Jersey, it is facing a drastic cut in homeland security funding. The concerns, well, it happens to be one of the most densely populated states and it sits right next to New York City. And if its ports were attacked, millions of consumers would be affected, not to mention the loss potentially of human life.

Here's Deborah Feyerick.

(BEGIN VIDEOTAPE)

DEBORAH FEYERICK, CNN CORRESPONDENT (voice-over): On September 11th, fire Captain Edward Sisk and his rescue unit raced from their station house in Elizabeth, New Jersey to the smoldering ruins of the World Trade Center in lower Manhattan. It took just 15 minutes.

CHIEF EDWARD SISK, UNION COUNTY FIRE DEPT.: We don't look at it as New York vs. New Jersey. We're facing the same threats every day.

FEYERICK: Across the river, there you are, two states, close as sisters. While New York City's federal anti-terrorism dollars soared, up more than 344 percent for next year, in New Jersey, the money was slashed by 35 percent.

ARMANDO FONTOURA, ESSEX COUNTY SHERIFF: It looked like they showed up and said, hey, you guys, we don't care about you. We think you've got enough.

FEYERICK: New Jersey has a major international airport, three vital shipping ports, a two mile stretch of oil refineries and chemical plants, and countless commuter neighborhoods. All right next to Manhattan. Every time there's a threat, as there was this summer, they are all potential targets. So why New Jersey politicians ask is emergency response money being cut at such a critical time?

GOV. RICHARD COOEY (D), NEW JERSEY: The terrorists of 9/11 at some point lived in New Jersey. The terrorists who bombed the World Trade Center in 1993 and the underground garage all lived in New Jersey. How in God's name can the president justify this? It is unconscionable.

FEYERICK (on camera): Five years ago, was this a piece of equipment you ever thought you'd be called on to use?

UNIDENTIFIED MALE: No. Since 9/11, the world has changed.

FEYERICK (voice-over): After 9/11, emergency responders across northern New Jersey came up with a plan. It involved buying high-tech equipment, like decontamination tents one year, and training the next.

CAPTAIN JAMES DRYLIE, WEST ORANGE POLICE: Having the reduction in funding that they're proposing is going to restrict our ability to protect ourselves, both as police and firefighters, but also to protect the general public.

DEPUTY CHIEF LATHEY WIRKUS, UNION COUNTY FIRE DEPT.: Watch what's going on in Iraq you see that they don't have the proper equipment to protect their vehicles with armor. Well, the same thing is now occurring here. They're telling us, we want you to take care of a terrorist attack but we're not going to give you the armor to protect your people.

FEYERICK: The outgoing Homeland Security Secretary offers no details but blames cuts on Congress' formula for handing out money.

TOM RIDGE, HOMELAND SECURITY SECRETARY: Some people win, and some people got more, some communities got less.

UNIDENTIFIED MALE: It certainly doesn't benefit the citizens in trying to protect them appropriately.

FEYERICK: A fear that keeps many first responders awake at night.

(END VIDEOTAPE)

ZAHN: And that isn't all. Deborah Feyerick.

Joining me now, a man on the front line of safety and security in Miami, Police Chief John Timoney. Early in his career he was the first deputy commissioner in New York City. (UNINTELLIGIBLE) always good to see you welcome.

JOHN TIMONEY, POLICE CHIEF, MIAMI: Good to see you Paula.

ZAHN: So, we've talked a lot about Miami being a potential terror target.

How do the feds justify cutting funding for your city? TIMONEY: I'm not sure. We were expecting around $23 million, not just for the city, for the region, for the county region. We wound up getting a little over 15, $15.8. And so were about $6 million short. As Tom Ridge just pointed out, some people win, some people lose. You know, next time around, I think FY05 is finished. And I think arguments have to be made for the upcoming year. And there needs to be, I think, a new look at how the disbursement of the funds happened. And nothing against Wyoming and Idaho, lets face it, it's going to be the big cities that are most likely to be attacked. I think the reason why...

ZAHN: Chief Timoney, you're sounding more patient than you sounded to me in the past.

What are the consequences of ending up being $6 million short?

TIMONEY: For us...

ZAHN: How does that affect you?

TIMONEY: A few things, one. It does affect us, because the only way you can do training for an entire police force is what's called back-fill overtime. If you have to train hundreds of police officers, that means they have to come off the street. The only way you can back-fill them on the street is to have overtime to be able to back- fill them. Now, you're able to do that to a certain extent with regular funds. But when you're talking about all the issues involving homeland security, it isn't just one day of training. It's training in a variety of areas. It's first responders. Dealing with biochemical stuff. Dealing with mass hazard situations. And so it's anywhere from five to 10 days of training a year which is an awful lot.

ZAHN: So, what your saying is the citizens of your city have a right to be outraged by this?

TIMONEY: Well, outraged? Upset. Definitely, upset. Because I think if you looked at Miami, Miami would be right up there. Even according to the feds, it's rated number seven as being most vulnerable. It's got a huge port, the largest shipping lines, commercial shipping lines in the world, international airport. A whole variety of other inviting targets, including just a year ago, the target by al Qaeda was high rise buildings, specifically hotels. And as you're aware, the whole Biscayne Bay is littered with high rise hotels. And so there are a lot of vulnerable targets here.

ZAHN: There's been a lot of talk about how these funds are disbursed and how political the process is. When you look at Wyoming and what it gets to fight terrorism and the likelihood of a terrorist attack there, at a personal level, how do you view that?

TIMONEY: I think right now, the process isn't fair or equitable. I think what you have to do is do a risk analysis. Treat it like you would treat a normal business. And I think if you looked at it from a risk basis, I think you could come to only one conclusion, that there are certain cities that whether you like it or not deserve more money than other parts of the country.

ZAHN: Finally tonight, you have known Bernard Kerik for years.

TIMONEY: Yes.

ZAHN: Just your reaction to all of this information that's come out about what ultimately led to his nomination going down the tubes?

Did you know any of that stuff?

TIMONEY: Yes. Well -- there were certain rumors that were up in New York, clearly out there of a personal nature, which for me is no big deal because if it doesn't impact on your work, that's fine. But then other issues have come up in the last week, that if in fact they are true, then they're troubling, because it goes to Bernie's fitness to command, if you will. But you know, he's a good guy. I've known him since he was a rookie police officer, I was a captain in the area where he worked. And he was a great cop. It's kind of unfortunate. But some of it is of his own doing, unfortunately.

ZAHN: But there's still a part of you who saw him lead quite gracefully and with a lot of vision on 9/11. So it stings, doesn't it?

TIMONEY: It does. Because when you -- especially NYPD. I'm ex- NYPD. And anytime any one of our guys or gals get in trouble, it affects the entire department and the reputation of the department. So while it certainly is Bernie, all of us sting a little.

ZAHN: Chief John Timoney, thanks for your time tonight.

TIMONEY: Thank you, Paula.

ZAHN: Always good to see you.

Let's check in with Aaron Brook, who's going to give us an idea of what's up this evening on his show.

Hi, Aaron.

AARON BROWN, HOST "NEWSNIGHT": HI, Paula, thank you. We've told a lot of stories out of Iraq since the war began. I don't think we've ever told one as compelling as the one we tell tonight. A clinical psychologist back from the war has written her story. What was good and what was not good. Again, this is as compelling a piece as we've ever run on "NEWSNIGHT" and I hope you'll join us tonight for the program.

ZAHN: Thanks so much, Aaron. See you a little bit later on.

A truly shocking story of gambling, greed and corruption. There's a lesson learned when a group of Texas investors stake their money on Washington lobbyists. That story next.

(COMMERCIAL BREAK) ZAHN: Casino gambling. It as multi-billion dollar business and some Native American tribes have been in on the action, raking in plenty of dough since 1988. That's when Congress gave tribes permission to open casinos in states where gambling is allowed, such as Texas.

But when one tribe ran into problems with that state and lost a fortune, well, it raised more than a few eyebrows in Congress.

Here's Ed Lavandera.

(BEGIN VIDEOTAPE)

ED LAVANDERA, CNN CORRESPONDENT (voice-over): The Speaking Rock Casino is a modest looking building that once generated extravagant profits for the Tigua Indians in El Paso, Texas.

ART SENCLAIR, GOVERNOR, TIGUA TRIBE: Twenty-four hours a day the parking lots were full. The revenue was coming in.

LAVANDERA: But in February 2002, the slot machine wheels stopped spinning. The state of Texas won a court battle to shut down the casino.

What happened next is described by federal and congressional investigators as a troubling tale of power and greed corrupting the American political system. At the center of it, two high-powered Republican lobbyists: Jack Abramoff and Michael Scanlon.

Just says after the Tigua Indian casino was shut down, Abramoff contacted tribal leaders in El Paso and offered to help.

SENCLAIR: He did approach the council under a lot of secrecy that he was going to open up the casino, but it was going to cost quite a bit of money.

LAVANDERA: The plan, as Tigua leaders describe it, was for the tribe to pay Abramoff's associate, Michael Scanlon $4.2 million, money that would help build political support to reopen Texas Indian casinos.

According to e-mails and memos, Abramoff and Scanlon would put language into a congressional bill that would allow the Tiguas to get back in the gaming business. If and when that happened, the Tiguas would promise to hire Abramoff's law firm as its lobbyist for about $150,000 a month.

Carlos Hisa is a Tigua tribal council member who was involved in those negotiations.

CARLOS HISA, LIEUTENANT GOVERNOR, TIGUA TRIBE: I was convinced. I was convinced that Jack Abramoff and Mike Scanlon were big shots in Washington.

LAVANDERA: Big shots who would help the Tigua cause. But what tribal leaders did not know was Abramoff and Scanlon were already working for an Indian tribe in Louisiana, a tribe that hired them to help shut down the competition, specifically, Indian casinos across the border in Texas, including the Tiguas.

HISA: We were caught. We trusted in this individual. He gained our trust, and he used it for his advantage. And it's all for the mighty dollar. That's the only reason he came down here.

LAVANDERA: Tigua leaders say and e-mails also show that the lobbyists asked them for another $300,000 in political contributions to help in support in Congress.

Mr. Scanlon's attorney has not responded to CNN's repeated requests for an interview. But Mr. Abramoff's attorney tells CNN his client did nothing wrong and denies he was improperly profiting by working for competing interests.

ABBE LOWELL, JACK ABRAMOFF'S ATTORNEY: The allegation that he worked both sides of the fence on the matter affecting them is simply factually wrong. He was not responsible for them being closed down. And when they were closed down, he did try to help them.

LAVANDERA: Even though the Tiguas paid out the money, it wasn't enough to reopen the casino. Abramoff's law firm never got the lobbying contract and Abramoff was fired.

Now a federal grand jury is investigating. But it was at two congressional hearings where the Tiguas say insult was added to injury, in the form of e-mails and memos read out loud by the senators.

UNIDENTIFIED MALE: You said in that, quote, "I wish those moronic Tiguas were smarter in their political contributions. I'd love us to get our mitts on that moolah. Oh, well, stupid folks get wiped out."

SEN. BEN NIGHTHORSE CAMPBELL (R), COLORADO: According to your e- mails, you referred to tribes as morons stupid idiots, monkeys, f-ing troglodytes, which you define as a lower form of existence, and losers.

SEN. KENT CONRAD (D), NORTH DAKOTA: You disparaged the very people that you were working for and engaged in what appears to be just an out and out scam.

LAVANDERA: Carlos Hisa says the tone of those e-mails surprised him.

HISA: Then I saw the e-mails. It was -- I was angry at myself and angry at Jack Abramoff and Mike Scanlon. I was hoping to run into them in a dark alley.

LAVANDERA: Abramoff and Scanlon refused to testify at the hearing. Abramoff's attorney says the e-mails are being read out of context and that congressional investigators are only interested in making headlines, not finding the truth.

LOWELL: We have learned in our world, in Washington in particular, that allegations are one thing and charges and proof are something else. I think people have to keep in mind that there are folks who want to tell one side of the story for their agendas.

LAVANDERA (on camera): The Tigua Indian casino was shut down almost three years ago. But to understand why tribal leaders felt they needed to spend big money on big time Washington lobbyists to bring the casino back to life, remember, this casino was bringing in $60 million a year.

HISA: All the programs that we have in place are in jeopardy.

LAVANDERA: Casino money rejuvenated the Tigua reservation. Dilapidated housing making way for suburban style comfort. But now construction has slowed down.

The Speaking Rock casino, that employed 1,100 people, now can only afford about 80 employees to run a bar and nightclub.

The tribe waits now for a grand jury to act. More Senate hearings are expected next year. In the meantime, the Tiguas find comfort in an old saying.

Coming up next, as we enjoy the start of the holiday season, our Maria Hinojosa gives us a very personal view of faith and family.

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ZAHN: The holiday season reminds us that faith and religion are vital to our national life. And this past weekend, many Mexican- Americans celebrated the feast of the Virgin of Guadalupe.

Maria Hinojosa reflects on the holy day's enduring meaning and a changing world.

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MARIA HINOJOSA, CNN CORRESPONDENT (voice-over): Every December 12, believers in La Virgen de Guadalupe, the virgin of Guadalupe, the patron saint of Mexico, gather to celebrate her miracle day, when about 500 years ago, she appeared to Aztec Indian Juan Diego.

On this day, the little children dress up like him in his memory. The virgin's apparition solidified Mexicans' commitment to Catholicism.

UNIDENTIFIED FEMALE: I wish I could have the faith that they have, you know? I'm not from Mexico. But I see their faith, their trust. They put it out. And I wish I could feel what they feel.

HINOJOSA: But what happens when you find yourself filled with faith but far from the church of your childhood?

I raised my own children to celebrate the virgin's day, because it is a truly Mexican holiday and I want them to be in touch with their cultural roots. But my kids never sat through an entire mass the way I did as a child.

Close to my New York neighborhood, there are images of the virgin everywhere: in people's homes, in store windows, restaurants and bakeries. In this bastion of the faithful, not everyone goes to church.

(on camera) Do you believe a lot in the virgin?

UNIDENTIFIED FEMALE: Yes.

HINOJOSA: But do you go to church every day?

UNIDENTIFIED FEMALE: No.

HINOJOSA: And are you very religious?

UNIDENTIFIED FEMALE: Not really.

HINOJOSA: But very -- but you have a lot of faith?

UNIDENTIFIED FEMALE: Oh, yes.

HINOJOSA (voice-over): We Americans have many beliefs, many gods, drawn from different traditions. Even though we may not go to a church, synagogue, or mosque.

UNIDENTIFIED FEMALE: The Mexicans come here with nothing. And one of the few things that they have is their values, their religious beliefs, and La Virgen de Guadalupe, which is very important.

HINOJOSA: Marta Moreno Vega was raised Catholic and in the African Uruba tradition, which is based on ancestor worship and nature. She's written two books on her life as a woman of faith.

MARTA MORENO VEGA, AUTHOR, "THE ALTAR OF MY SOUL": Faith cannot be put in a box. It's not the building. It's the faith that one has. It's that spirituality. It's that understanding that as a sacred person, you're sacred in the world. You're not sacred in one place. And you're sacred all the time.

HINOJOSA: But if, like me, you're raising children, how do you teach them to believe in a God if you don't rely on a religious institution? There aren't many lessons on that for my generation.

Perhaps you just simply do it by example, by exposing them to religion and the oh so many gods from which we can choose and having faith that as a parent, you'll do the right thing.

Maria Hinojosa, CNN, New York.

(END VIDEOTAPE)

ZAHN: And please stick around. We'll look at what the late night comedians are talking about when we come back.

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ZAHN: President Bush gave the nation's top civilian honor yesterday to three men who were critical to his Iraq policy: former CIA director George Tenet, retired General Tommy Franks, and former Iraq administrator Paul Bremer.

"The Daily Show's" Jon Stewart took that as one big fat straight line.

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JON STEWART, HOST, "THE DAILY SHOW": We begin tonight in the Middle East. You know, some nations, they get potamia (ph) and they leave it folded nicely. Not our country. We create a bit of a mess of potamia.

History has shown our venture in Iraq to be riddled with mistakes. The flawed prewar intelligence, the inadequate number of troops, the decision to disband the Iraqi army.

Well, the architects of each of those decisions was marched into the White House to take finally take full public responsibility for their colossal, unforgivable mistakes -- hey, what the hell?

That better be some kind of shame medal.

(END VIDEO CLIP)

ZAHN: Meanwhile, at the White House, Barney's in a new video. No, not the big dinosaur. I'm talking about Barney the first pup. As in Barney Bush of 1600 Pennsylvania avenue. Yes, the White House has gone to the dog, or maybe dogs.

Here's Jeanne Moos.

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JEANNE MOOS, CNN CORRESPONDENT (voice-over): If you think only first ladies give White House tours, you haven't seen Barney cam. The White House has released Barney's latest opus.

MOOS: Miss Beazley's father is Barney's half brother. She was a present from the president to his wife for her birthday.

Miss Beazley is named after a dinosaur in a favorite children's book that the Bush daughters used to read, though the tale was written by a Democrat in the 1950s as an anti-McCarthy parable.

BUSH: Miss Beazley won't be here until January.

MOOS: That's because Miss Beazley is at a kennel in New Jersey being house broken.

Barney, meanwhile, continues with his movie career. We wondered why there were so many shots of Barney scampering around and so little plot. We were told the point of the video is to show off the White House Christmas decorations.

TRIUMPH THE INSULT COMIC DOG: You're Bush's brains, Karl. I was expecting a much smaller man!

MOOS: This latest video is Barney's fourth movie. Three were holiday releases. And one premiered at the Republican convention. In it, Barney dreamed of a first dog debate.

MCCLELLAN: To my right, Barney Bush. To my left, Fifi Kerry.

MOOS: A French poodle in a beret, no less. Barney's performance in this year's holiday feature got polite reviews.

UNIDENTIFIED FEMALE: The irrepressible Barney.

MOOS (on camera): The White House, by the way, has no plans to enter the latest Barney movie in Cannes or Sundance or any other film festival.

(voice-over) Barney is such a big star that he can ignore even a president's orders. You come to me.

And not even Vice President Cheney gets to wear a leash that appears color coordinated with the president's tie.

(END VIDEOTAPE)

ZAHN: Barney is a star. Jeanne Moos, thanks.

Here's what you said about our question of the day: "Can Saddam Hussein and his top aides get fair trials in Iraq?" Forty percent of you said yes; 60 percent said no. Remember, not a scientific survey, just a taste of what some of our web site visitors are thinking. We want to thank you all for joining us. Tomorrow, is there a chief justice, Clarence Thomas, in the Supreme Court's future? I'll ask someone with a very definite opinion, Anita Hill.

"LARRY KING LIVE" is next tonight. Thanks again for dropping by here tonight. We'll be back again, same time, same place tomorrow night. Good night.

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